Swissco

Swissco: Secured charter contracts worth an aggregate of $27m for two anchor handling tug and supply vessels. The new 60-meters vessels will be deployed immediately after the group takes delivery of them in Dec '13 and Jan '14. One of the vessels will have a minimum deployment period of 12 months in the Middle East with a sale and purchase option exercisable after the charter period, while the second vessel will be deployed for a total of 27 months in North East Australia. Swissco is undergoing a fleet renewal initiative, getting their vessels from Chinese shipyards, and targets 50 offshore support vessels (OSVs) over the next few years from the 33 vessels currently. The group expects healthy demand for its vessels in the mid-term. Vessel chartering generates better margins compared to its maritime services and repair segments. In the recent 3Q results, vessel chartering contributed 90% to group’s revenue and we expect the segment to continue its robust performance over the next year as its fleet gets renewed. At $0.295, Swissco trades at an attractive trailing P/E of 8.1x, slightly above its historical average. Valuations may be supported by the group's growth in the near-term, for investors looking for exposure in a conservative OSV player with relative lower gearing compared to peers.